Last Christmas, when we were still innocent and Bitcoin was testing $20,000, this pathetic blog was also prophetic. Bitcoin, we said, was the new dot-com. The end result would be the same.

So I get digital money. Who doesn’t? How many people still carry folding money, ever write a cheque or go to a physical bank? A dwindling number. In time, none. I also understand how moisters who have grown up taught to be afraid of stocks and realize they can’t afford real estate would be drawn to cryptos. In large part, they own this market. They constitute the millions of retail investors who have been pouring billions into Bitcoin and its clones on the faith that it’s the future. And in that, a huge parallel with the dot-com bubble of 18 years ago. We know how that ended, even though the underlying principle – that the whole world would go online – was totally valid.

So while cryptocurrencies have legs – the Bank of Canada is investigating creating one of its own and Bitcoin ETFs will soon appear – the current trading platforms and valuations could turn to dust before long. The sheep are doing predictable things – flocking to anything that promises rapid gains with renegade genes. The current story illustrating this is of the Long Island Tea Corp, whose stock jumped 289% when it renamed itself the Long Blockchain Corp. Hey kids, maybe you should Google pets.com.

Like dot-coms with cool ideas, CEOs on skateboards and no profits, cryptos are not valued based on traditional metrics. Most investors wouldn’t know a blockchain if they fell over one. The market is completely driven by speculation. It’s gambling, not investing. The surprise which awaits the buyers when they decide to become sellers will be epic. As the financial professionals move in – and it’s happening – the kids will end up being someone’s lunch. The coolness and technological elegance of the underlying asset will not matter one whit. Early speculators are often rewarded. Later ones are always spanked.

Bitcoin, Litecoin, bitcoin cash, ethereum, ripple and whatever’s next may be new. Human nature is not. And the young must learn the same stuff over and again. It’s not different this time.

Nope, it’s not different. But it’s worse. While the tech-heavy Nasdaq shed a stunning 78% of its value as the Internet bubble burst in 2000, cryptocurrencies as a group have erased lost 80%.? And the losses aren’t over. Some of these puppies could go to zero.

The parallels are profound. Yes, blockchain is just as promising as the World Wide Web was almost two decades ago. A game-changing technology with a myriad of applications will undoubtedly alter the way so much is done, making it cheaper, more effective, secure and reliable. Just like online connectivity has come to connect your refrigerator and your car, or let Siri tell you what to wear.

But when it comes to investing, some things never change. Speculation, greed, ambition and bravado can easily propel assets beyond their intrinsic values. Combine that with endless, irresponsible and unregulated hype, plus investor naiveté and ignorance, and the die is cast. It was evident from the early days of the BTC explosion that cryptos would hurt a lot of people. Sadly, most of them are kids with no financial reserves. And billions in trades were put on credit cards. Ouch.

It was always clear regulators, central banks, organized financial markets and national governments would not allow alternative currencies to thrive. The intense volatility of cryptos has made them inherently useless as a medium of exchange, and events of the last year have shown they’re no storehouse of value. In short, worthless. But at least you learned something. Maybe.

$?? $? $

Markets are saying there’s an eight-in-ten chance the cost of money will go up again next month. It would be the fifth increase in about a year for the Bank of Canada, and come despite the sucky job numbers delivered last last week.

Face it: the bankers have no choice. The current CB rate is negative – less than than inflation (at 3%). Our guys have raised rates four times while the Fed has pulled the trigger on seven occasions. We’re way behind the curve in terms of normalizing the cost of money from the historic lows hit after the GFC.

Soon we’ll be even further back as the Fed’s expected to lift its benchmark rate twice more before the end of the year, plus another two by the summer of 2019. Yes, blame Trump. The American economy is running hot thanks to his massive (and probably dangerous) corporate tax cut, serious deregulation, and a trade war that’s increasing inflation and goosing jobs.

So, we can resist cuts, watch the loonie flounder and import American inflation (without the growth), or keep gradually increasing rates. Markets are getting ready for the latter. You should, too.

$? $? $

Silly us. We thought when the Toronto Real Estate Board resoundingly lost a seven-year legal battle to blind consumers to market stats (being shut down repeatedly by the courts and censored by the federal government) that it would capitulate. We all believed a new day of transparency was coming, that citizens would finally see beyond realtor claims and fibs and make their own informed decisions on price and value.

But, alas, no such deal. These guys refuse to die.

Zoocasa just received one? of those miserable cease-and-desist letters threatening to take away its access to MLS info if it continues to publish it, even in a password-protected state. TREB argues that after being spanked by the Supreme Court in August it has 60 days to prepare for the release of its data. And many lawyers.

Not. Holding, Breath.

About the picture...

Steve writes: “This is Buddy. He’s my first dog. Buddy is 12 and unfortunately he’s got heart disease. Our vet gave him one year, which was six months ago. Fortunately, our family lives well below our means and never ever tried to show our worth through excessive material things. That’s allowed us to engage a cardiologist for Buddy and give him a longer and/or more comfortable life. He gets a walk every day. He’s smiling here because he knows he’s about to get a little piece of pizza.”

Riding down the elevator shaft from the 68th floor of an office tower on Bay Street the news appeared above that a plane had hit a tall building in NYC. As the car arrived at the concourse level, the doors opened onto an incredible scene.

Hundreds – thousands, maybe – of people were standing in a mass around the banks of TV monitors which normally broadcast stock market news to the flocks of passersby in Toronto’s underground maze known as The Path. It was dead quiet. Just the blare of CNN and the astonishing pictures of the burning WTC. About then the second plane hit. The crowd gasped. Many wept openly. I was traveling with a cameraman, coming from an interview for a network business TV show I owned at the time. We captured the event, then headed above ground.

By this time all of the major bank towers circling King & Bay – the TD Centre, Commerce Court, First Canadian Place (BMO) and ScotiaPlaza – had police cars surrounding them, pulled up on the sidewalks and plaza. We were hundreds of miles away from New York, but it felt just over the horizon.

That night I sat with Dorothy and the Siberian on the small stoop outside our urban townhouse. ‘Listen,’ she said. And there was silence. The sky above – always noisily populated with craft of all sizes headed to or from two airports – was empty. In just a few hours the?entire world had changed. And would remain so.

In the last 17 years terrorism has become mainstream and security measures ingrained into daily life. On my routine flights to Vancouver before Nine Eleven the pilots would sometimes invite me into the cockpit to traverse the mountains or experience a night landing at YVR. Airports were fun and exciting. Visitors could stroll into the Parliament Buildings in Ottawa. Muslims were just regular people.

The loss of innocence was palpable, as it had been when I was a kid and Kennedy was shot down. But this time the event was global, and felt like the unravelling of society as it had been known. Since then it’s not hard to argue that extremes have formed. Globalism and nationalism. The gulf between the wealthy and the rest. Left and right. Con and Lib. Free traders and protectionists. Men and MeToo. Trump and the world.

Seventeen years on there’s still a war in Afghanistan and ISIS has proven how terrorism can morph and almost turn into a country. The factors that bend people into haters and killers have probably not been addressed in any meaningful way. Divisions are worse, it seems, not bridged. The rise of populism in the US and Europe could pose the greatest threat to global stability since WW2. Simple tariffs turn into walls, and refugees – fleeing violence, poverty or climate change – are forced into militancy. People, after all, will do anything when cornered with their families.

In a world of contrasts, remember the eleventh of September. The consequences have only begun. Today I went to the local food bank and paid for some plumbing repairs they need. Then I wrote this. Now I will listen for airplanes on the way home.

The views expressed are those of the author, Garth Turner, a Raymond James Financial Advisor, and not necessarily those of Raymond James Ltd. It is provided as a general source of information only and should not be considered to be personal investment advice or a solicitation to buy or sell securities. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor's circumstances and risk tolerance before making any investment decision. The information contained in this blog was obtained from sources believed to be reliable, however, we cannot represent that it is accurate or complete. Raymond James Ltd. is a member of the Canadian Investor Protection Fund.